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Artificial Intelligence has driven shares of tech companies like Microsoft (MSFT), Amazon (AMZN), Nvidia (NVDA), and Google (GOOG, GOOGL) to new highs this year. But the technology, which companies promise will revolutionize our lives, is driving something else just as high as stock prices: energy consumption.
AI data centers use huge amounts of power and could increase energy demand by as much as 20% over the next decade, according to a Department of Energy spokesperson. Pair that with the continued growth of the broader cloud computing market, and you’ve got an energy squeeze.
But Big Tech has also set ambitious sustainability goals focused on the use of low-carbon and zero-carbon sources to reduce its impact on climate change. While renewable energy like solar and wind are certainly part of that equation, tech companies need uninterruptible power sources. And for that, they’re leaning into nuclear power.
Tech giants aren’t just planning to hook into existing plants, either. They’re working with energy companies to bring mothballed facilities like Pennsylvania’s Three Mile Island back online and looking to build small modular reactors (SMRs) that take up less space than traditional plants and, the hope is, are cheaper to construct.
But there are still plenty of questions as to whether these investments in nuclear energy will ever pan out, not to mention how long it will take to build any new reactors.
While solar and wind power projects provide clean energy, they still aren't the best option for continuous power. That, experts say, is where nuclear energy comes in.
“Nuclear energy is, effectively, carbon-free,” explained Ed Anderson, Gartner distinguished vice president and analyst. “So it becomes a pretty natural choice given they need the energy, and they need green energy. Nuclear [power] is a good option for that.”
The US currently generates the bulk of its electricity via natural gas plants that expel greenhouse gases. As of 2023, nuclear power produced slightly more electricity than coal, as well as solar power plants.
Last week, Google signed a deal to purchase power from Kairos Power’s small modular reactors, with Google saying the first reactor should be online by 2030, with plants expected to be deployed in regions to power Google’s data centers, though Kairos didn’t provide exact locations.
Amazon quickly followed by saying just two days later that it is investing in three companies — Energy Northwest, X-energy, and Dominion Energy — to develop SMRs. The plan is for Energy Northwest to build SMRs using technology from X-energy in Washington State and for Amazon and Dominion Energy to look at building an SMR near Dominion’s current North Anna Power Station in Virginia.
Last month, Microsoft entered into a 20-year power purchasing agreement with Constellation Energy, under which the company will source energy from one of Constellation's previously shuttered reactors at Three Mile Island by 2028.
Three Mile Island suffered a meltdown of its other reactor in 1979, but according to the Nuclear Regulatory Commission, there was no serious impact to nearby people, plants, or animals, as the plant itself kept much of the dangerous radiation from escaping.
In 2023, Microsoft announced it would source power from the Sam Altman-chaired nuclear fusion startup Helion by 2028. Altman also chairs the nuclear fission company Oklo, which plans to build a micro-reactor site in Idaho. Nuclear fusion is the long-sought process of combining atoms that produces power without dangerous nuclear waste. No commercial applications of such plants currently exist.
Microsoft founder Bill Gates has also founded and currently chairs TerraPower, a company working to develop an advanced nuclear plant at a site in Wyoming.
Nuclear power output has remained stagnant for years. According to US Energy Information Administration press officer, Chris Higginbotham, nuclear power has contributed about 20% of US electricity generation since 1990.
Part of the reason has to do with the fear of meltdowns, like the one at Three Mile Island, as well as the meltdowns at Chernobyl in Ukraine in 1986 and the Fukushima Daiichi plant in Japan in 2011.
Chernobyl was the worst meltdown ever, spreading radioactive contamination across areas of Ukraine, the Russian Federation, and Belarus, resulting in thyroid cancer in thousands of children who drank milk that was contaminated with radioactive iodine, according to the Nuclear Regulatory Commission.
Plant workers and emergency personnel were also exposed to high levels of radiation at the scene. The Fukushima plant suffered multiple meltdowns as a result of a massive earthquake and subsequent tsunami, which caused significant damage to three of the plant's six reactors.
But according to the United Nations Scientific Committee on the Effects of Atomic Radiation (UNSCEAR) as of 2021, “no adverse health effects among Fukushima residents have been documented that could be directly attributed to radiation exposure from the accident.”
Outside of the perception, nuclear plants are expensive and take time to construct.
Georgia Power’s two Vogtle reactors came online in 2023 and 2024, after years of delays and billions in cost overruns. The reactors, known as Unit 3 and Unit 4 were originally expected to be completed in 2017 and cost $14 billion, but the second reactor only started commercial operations in April this year. The final price tag for the work is estimated to top out at $31 billion, according to the Associated Press.
The explosion in cheap energy from natural gas has also made it difficult for nuclear plants to compete financially. Now nuclear companies are hoping SMRs will lead the way in building out new nuclear energy capacity. But don’t expect them to start popping up for a while.
“The SMR conversation is really long term,” Jefferies managing director and research analyst Paul Zimbardo told Yahoo Finance. “I'd say almost all of the projections are into the 2030s. The Amazons, the Googles, some of the standalone SMR developers, 2030 to 2035, which is also what some of the utilities are saying as well.”
What’s more, Zimbardo says, power generated by SMRs is expected to cost far more than traditional plants, not to mention wind and solar projects.
“Some of the projections are well above $100 a megawatt hour,” Zimbardo explained. “To put it in context, an existing nuclear plant has a cost profile of around $30 a megawatt hour. Building new wind, solar, depending on where you are in the country, can be as low as $30 a megawatt hour, or $60 to $80 a megawatt hour. So it's a very costly solution.”
Not everyone is buying the promise of SMRs, either. Edwin Lyman, director of nuclear power safety at the Union of Concerned Scientists, says the small-scale reactors are still an untested technology.
“Despite what one might think of all the brain power at these tech companies, I don't think they've done their due diligence,” Lyman told Yahoo Finance. “Or they're willing to entertain this as a kind of side show just so they have all their bases covered to deal with this postulated massive expansion and demand for data centers.”
Lyman also takes issue with the idea that SMRs will be able to get up and running quickly and begin providing reliable power around the clock at low cost.
“The historical development of nuclear power shows that it's a very exacting technology, and it requires time, requires effort, requires a lot of money and patience,” he said. “And so I think the nuclear industry has been trying to make itself look relevant, despite their recent failures to meet cost and timeliness targets.”
Still, with tech companies promising an AI revolution that requires power-hungry data centers, nuclear may be the only realistic green choice until solar and wind can take over permanently.
Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.
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